On Monday, JPMorgan (NYSE:JPM) upgraded Akbank TAS (IS:AKBNK:TI) stock from Neutral to Overweight and increased its price target to TRY98.00, up from the previous TRY91.00. The upgrade reflects the firm's positive outlook on the bank's potential for tangible book value growth, which is projected to be the highest among its peers with an expected 36% and 39% year-over-year growth in FY25E and FY26E, respectively.
The bank's return on tangible equity (ROTE) is anticipated to reach 27% and 33% in the same periods, further buoyed by an additional other comprehensive income (OCI) from its sizable securities portfolio. JPMorgan also noted Akbank's robust capital position, highlighting a 13.4% Common Equity Tier 1 (CET1) ratio excluding forbearance in the third quarter of 2024.
The analysts point out Akbank's strategic positioning among Turkish banks, especially after Garanti Bank's free float-related exit from the MSCI Index, which has made Akbank a prime focus for foreign investors. The bank's ongoing emphasis on small-ticket consumer lending and significant customer base growth—from 8.5 million at the end of 2021 to over 14 million by the third quarter of 2024—has resulted in market share increases in consumer loans, credit cards, and fee and commission income.
Furthermore, these strategic efforts are expected to positively impact the bank's long-term profitability. Despite these strengths, Akbank's shares are currently trading at 1.1 times and 0.8 times FY25E/FY26E book value, which is in line with the sector average but at an 11% and 13% discount compared to Garanti Bank. JPMorgan's analysis suggests that Akbank offers the most attractive risk/reward among Turkish banks in the current cycle, positioning it favorably for potential investors.
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